The City of London is one of the oldest financial centres and today remains at the heart of London's financial services industry.[3]

A financial centre is a location that is home to a cluster of nationally or internationally significant financial services providers such as banks, investment managers or stock exchanges.[4]:1 A prominent financial centre can be described as an international financial centre (IFC) or a global financial centre and is often also a global city. Regional and national financial centres interact with these leading centres and may act as business feeders or provide local access to them. An offshore financial centre (OFC) is typically a smaller, lower-tax, more lightly regulated jurisdiction that primarily serves non-residents. In a number of large cities, the name International Financial Centre is given to skyscrapers located in business districts, for example the landmark International Finance Centre (Hong Kong).

Financial centres serve the domestic business of their home country and may also serve international business. International activity occurs as soon as one of the participants in the activity is foreign to the home country of the financial centre, or when the instruments themselves are international in nature such as Eurobonds. The term international financial centre or global financial centre is mostly used to indicate a prominent financial centre where such international or cross-border business takes place.[6][7]

International Financial Centers (IFCs)—such as London, New York, and Tokyo—are large international full-service centers with advanced settlement and payments systems, supporting large domestic economies, with deep and liquid markets where both the sources and uses of funds are diverse, and where legal and regulatory frameworks are adequate to safeguard the integrity of principal-agent relationships and supervisory functions.

International financial centres started an early primitive life in the 11th century in England at the annual fair of St. Giles, then developed in medieval France during the Champaign Fairs. The first real international financial center was the City State of Venice which slowly emerged from the 9th century to its peak in the 14th century.[9] Contemporary finance centers such as London, Amsterdam, Paris, Tokyo and New York, have long histories;[10][11] today there is a diverse range of financial centres worldwide.[12] While New York and London often stand out as the leading global financial centres,[13][14] other established financial centres provide significant competition and several newer financial centres are developing.[15] Despite this proliferation of financial centres, academics have discussed evidence showing increasing concentration of financial activity in the largest national and international financial centres in the 21st century.[16]:24–34 Others have discussed the ongoing dominance of New York and London, and the role linkages between these two financial centres played in the financial crisis of 2007–08.[17]

Prior to the 1960s, there is little data available to rank financial centres.[4]:1 In recent years many rankings have been developed and published. Two of the most relevant are the Global Financial Centres Index and the International Financial Centres Development Index.[18]

The Global Financial Centres Index is compiled semi-annually by the London-based British think-tank Z/Yen. London has been the top-ranked centre from the index's inception in 2007, except from March 2014 to September 2015, when New York City led.[19][20][21]

The International Financial Centres Development Index is compiled annually by the Xinhua News Agency of China with the Chicago Mercantile Exchange and Dow Jones & Company of the United States, and is known as the Xinhua-Dow Jones International Financial Centers Development Index. New York has been the top-ranked centre since inception of the index in 2010. According to the 2014 Xinhua-Dow Jones International Financial Centres Development Index, the top ten financial centres in the world are:[23]

Comparisons of financial centres focus on their history, role and significance in serving national, regional and international financial activity. Each centre's offering includes differing legal, tax and regulatory environments.[27] One journalist suggested three prime factors for success as a financial city: a pool of money to lend or invest; a decent legal framework; and high-quality human resources.[28]

Amsterdam. Amsterdam is well known for the size of its pension fund market. It is also a centre for banking and trading activities.[29] Amsterdam was a prominent and innovative financial centre in Europe in the 17th century.[30]:24

Dublin. Dublin is a diverse financial services centre, home to banking, insurance and trading services as well as bespoke activities such as aircraft leasing. Dublin has a global reputation as an asset management centre, particularly for alternative investment funds.[33][34]

Frankfurt. Frankfurt attracts many foreign banks which maintain offices in the city. It is the seat of Deutsche Börse, one of the leading stock exchanges and derivatives markets operators, and the European Central Bank, which sets the monetary policy for the single European currency, the euro; in addition, in 2014 the European Central Bank took over responsibility for banking supervision for the 18 countries which form the Eurozone. It is also the seat of Deutsche Bundesbank, the German central bank,[35] as well as of EIOPA, the EU's supervisory authority for insurances and occupational pension systems.[36]

Frankfurt has been the financial centre of Germany since the second half of the 20th century as it was before the mid-19th century. Berlin held the position during the intervening period, focusing on lending to European countries while London focused on lending to the Americas and Asia.[37][38]

London. London has been a leading international financial centre since the 19th century.[42]:74–75[43]:149 For much of this time, it has been a major centre of lending and investment around the world and during the late 20th century played an important role in the development of new financial products such as the Eurobond market in the 1960s and derivatives in the 1990s.[10]:13[30]:2[44]English contract law was adopted widely for international finance, with legal services provided in London,[45] and financial institutions located there provided services internationally such as Lloyd's of London for insurance and the Baltic Exchange for shipping.[46]

Luxembourg. The Luxembourg financial centre is the largest investment fund centre in Europe, and second in the world after the United States. It is the leading private banking centre in the Eurozone and the largest captive reinsurance centre in Europe. 143 banks from 28 different countries are established in Luxembourg.[59] The country is also the third largest renminbi centre in the world by numbers, in certain activities such as deposits, loans, bond listing and investment funds.[60] Three of the largest Chinese banks have their European hub in Luxembourg (ICBC, Bank of China, China Construction Bank).

Madrid. Madrid is the headquarters to the Spanish company Bolsas y Mercados Españoles, which owns the four stock exchanges in Spain, the largest being the Bolsa de Madrid. Trading of equities, derivatives and fixed income securities are linked through the Madrid-based electronic Spanish Stock Market Interconnection System (SIBE), handling more than 90% of all financial transactions. Madrid ranks fourth in European equities market capitalisation, and Madrid’s Stock Exchange is second in terms of number of listed companies, just behind New York Stock Exchange (NYSE plus NASDAQ).[61] As a financial centre, Madrid has extensive links with Latin America and acts as a gateway for many Latin American financial firms to access the EU banking and financial markets.[62]:6–7

New York City. Since the middle of the 20th century, New York City, represented by Wall Street, has been described as a leading financial centre.[4]:1[16]:25[17]:4–5 Over the past few decades, with the rise of a multipolar world with new regional powers and global capitalism, numerous financial centres have challenged Wall Street, particularly London and several in Asia, which some analysts believe will be the focus of new worldwide growth.[64]:39–49[65] One source described New York as extending its lead as the world's centre of finance in November 2014; according to Kinetic Partners, "New York has proven that it can draw and maintain institutions that believe it is the best place to grow their businesses".[66]

Shanghai. Official efforts have been directed to making Pudong a financial leader by 2010.[74] Efforts during the 1990s were mixed, but in the early 21st century, Shanghai gained ground. Factors such as a "protective banking sector" and a "highly restricted capital market" have held the city back, according to one analysis in 2009 in China Daily.[75] Shanghai has done well in terms of market capitalisation but it needs to "attract an army of money managers, lawyers, accountants, actuaries, brokers and other professionals, Chinese and foreign" to enable it to compete with New York and London.[76] China is generating tremendous new capital, which makes it easier to stage initial public offerings of state-owned companies in places like Shanghai.[77]

Singapore. Singapore has developed into the Asia region’s largest centre for foreign exchange and commodity trading, as well as a growing wealth management hub.[78] Other than Tokyo, it is one of the main centres for fixed income trading in Asia. However, the market capitalisation of its stock exchange has been falling since 2014 and several major companies plan to delist.[79]

Sydney. Australia's most populous city is a financial and business services hub not only for Australia but for the Asia-Pacific region. Sydney competes quite closely with other Asia Pacific hubs, however it concentrates a greater portion of Australian-based business in terms of clients and services. Sydney is home to two of Australia's four largest banks, the Commonwealth Bank of Australia and Westpac Banking Corporation, both headquartered in the Sydney CBD. Sydney is also home to 12 of the top 15 asset managers in Australia, Melbourne on the other hand tends to concentrate more of the Australian superannuation funds (pension funds). Sydney is using the large Barangaroo development project on its harbour to further position itself as an Asian Pacific hub.[80] Sydney is also home to the Australian Securities Exchange and an array of brokerage banks which are either headquartered or regionally based in Sydney including Australia's largest investment bank Macquarie Group.[81][82]

Tokyo. One report suggests that Japanese authorities are working on plans to transform Tokyo but have met with mixed success, noting that "initial drafts suggest that Japan's economic specialists are having trouble figuring out the secret of the Western financial centres' success."[83] Efforts include more English-speaking restaurants and services and the building of many new office buildings in Tokyo, but more powerful stimuli such as lower taxes have been neglected and a relative aversion to finance remains prevalent in Japan.[83] Tokyo emerged as a major financial centre in the 1980s as the Japanese economy became one of the largest in the world.[4]:1 As a financial centre, Tokyo has good links with New York City,[84] and London.

Zurich. Zurich is a significant centre for banking, asset management including provision of alternative investment products, and insurance.[86][87][88] Since Switzerland is not a member of the European Union, Zurich is not directly subject to EU regulation.

Others. Mumbai is an emerging financial centre which currently provides services to support other financial centres.[89][90][91] Cities such as São Paulo and Johannesburg and other "would-be hubs" lack liquidity and the "skills base," according to one source.[28] Financial industries in countries and regions such as the Indian subcontinent and Malaysia require not only well-trained people but the "whole institutional infrastructure of laws, regulations, contracts, trust and disclosure" which takes time to happen.[28]

In today’s burgeoning and increasingly integrated global financial markets — a vast, neural spaghetti of wires, Web sites and trading platforms — the N.Y.S.E. is clearly no longer the epicenter. Nor is New York. The largest mutual-fund complexes are in Valley Forge, Pa., Los Angeles and Boston, while trading and money management are spreading globally. Since the end of the cold war, vast pools of capital have been forming overseas, in the Swiss bank accounts of Russian oligarchs, in the Shanghai vaults of Chinese manufacturing magnates and in the coffers of funds controlled by governments in Singapore, Russia, Dubai, Qatar and Saudi Arabia that may amount to some $2.5 trillion. -- Daniel Gross in 2007.[77]

”

An example is the alternative trading platform known as BATS, based in Kansas City, which came "out of nowhere to gain a 9 percent share in the market for trading United States stocks."[77] The firm has computers in the U.S. state of New Jersey, two salespersons in New York City, but the remaining 33 employees work in a centre in Kansas.[77] Charlotte is the second-largest banking centre in the United States, after New York City. Bank of America, the United States' second-largest bank is headquartered here, as well as a secondary headquarters for Wells Fargo. BB&T, MetLife, TIAA-CREF, and SunTrust Banks all have a major corporate presence in the city.

An offshore financial centre, although not precisely defined, is usually a small, low-tax jurisdiction specialising in providing corporate and commercial services to non-residents in the form of offshore companies and the investment of offshore funds.[8]

The term offshore financial centre is a relatively modern neologism, first coined in the 1980s.[92] Although the terms are not synonymous, many leading offshore finance centres are regarded as "tax havens", and the lack of precise definition often leads to confusion between the concepts. In Tolley's International Initiatives Affecting Financial Havens[93] the glossary of terms defines an "offshore financial centre" in forthright terms as "a politically correct term for what used to be called a tax haven." However, this is qualified by adding "The use of this term makes the important point that a jurisdiction may provide specific facilities for offshore financial centres without being in any general sense a tax haven."

In 2009 the International Financial Centres Forum (IFC Forum) was established by a group of professional service firms and businesses with offices in the leading offshore centres.[94] According to its website, the IFC Forum aims to provide authoritative and balanced information about the role of the small international financial centres in the global economy.